Real Estate Guide for NRIs: Buy, Own & Invest Smart in India
Real estate remains one of the most popular investment options for NRIs. Whether you’re planning to build your dream home, invest for future returns, or secure a place for your family in India—buying property can be a great decision when done right.
This guide will walk you through:
Table of Contents
Buying Property in India as an NRI
Yes, NRIs can buy property in India—but there are a few restrictions to be aware of.
What You Can Buy:
- Residential property (apartment, bungalow, etc.)
- Commercial property (office space, shops)
- Non-agricultural land (for residential or commercial use)
What You Cannot Buy:
- Agricultural land, plantation property, or farmhouses (unless inherited)
Mode of Payment:
- Payments must be made through Indian banking channels.
- Use your NRE, NRO, or FCNR accounts for all transactions.
- Cash transactions are not allowed under FEMA.
Tips for Safe Property Purchase:
- Verify title documents, encumbrance certificates, and land approvals
- Prefer RERA-registered projects to avoid builder fraud
- Consult a real estate lawyer familiar with NRI rules
Legal Rules & Repatriation Guidelines
As an NRI property owner, it’s vital to understand the legal obligations and tax responsibilities.
Legal Requirements:
- Register the property in your name.
- Ensure the sale deed is stamped and registered as per local laws.
- Keep proof of purchase: payment receipts, builder agreements, registration documents.
Repatriation of Sale Proceeds:
- Sale proceeds of up to USD 1 million per financial year are allowed from NRO accounts.
- The property must be purchased using foreign currency through NRE/FCNR accounts.
- File Form 15CA/15CB and obtain bank approval to repatriate funds.
- Capital gains tax must be paid before repatriation.
Tax Implications:
- TDS of 20% (plus surcharge and cess) applies to property sale by NRIs.
- Rental income from the property is taxable in India under your PAN.
- Deduct municipal taxes and claim standard 30% deduction on rental income.
Renting vs. Owning – What’s Right for NRIs?
Here’s a quick comparison to help you decide:
| Factor | Renting | Owning |
|---|---|---|
| Flexibility | High | Low |
| Investment Value | None | High |
| Tax Considerations | Minimal | Taxable rental income |
| Maintenance Responsibility | Tenant | Owner |
Choose to Own If:
- You plan to return or retire in India
- You want to build assets in growth cities like Hyderabad, Pune, or Bangalore
- You’re financially ready for a long-term investment
Choose to Rent If:
- You’re unsure about long-term plans
- You prefer liquidity and low hassle
- You want to avoid property maintenance or legal complexities
Common Mistakes NRIs Must Avoid
- Using a Resident Savings Account: NRIs must use NRE/NRO accounts for transactions. Using a resident account can lead to FEMA violations.
- Ignoring Tax Rules: Rental income is taxable, and failing to declare it can lead to penalties.
- Incomplete KYC: Ensure your KYC with banks and property registrations reflect NRI status.
- Neglecting Local Laws: Property laws vary by state; consult local legal advisors.
Real-Life Case Study: NRI Investor in Singapore
Raj, an IT professional based in Singapore, bought a 2BHK flat in Bangalore through his NRE account. He registered the property in his name, set up a property manager locally, and declared rental income in his Indian tax return. He later sold the property at a profit and repatriated the funds using Form 15CA/15CB. Thanks to early planning, all steps were smooth, and his compliance was intact.
FAQs
Q1. Can I buy property jointly with a resident Indian? Yes, NRIs can jointly own property with resident Indians, provided all payments are made from appropriate accounts.
Q2. Is it better to buy under construction or ready-to-move-in property? Ready properties offer immediate possession and less risk, while under-construction units may offer better returns but carry completion risks.
Q3. Do I need to be physically present to register the property? No. You can issue a Power of Attorney (PoA) to a trusted person to complete formalities on your behalf.
Q4. How do I handle property maintenance when living abroad? Hire a reliable property management firm or use local family support. Schedule annual visits to inspect property status.
Conclusion
Indian real estate remains a robust long-term asset for NRIs—offering both emotional security and financial growth. But success depends on proper documentation, regulatory compliance, and a clear investment plan. With the right guidance and strategic execution, your Indian property dream can become a rewarding reality.
Need help evaluating a property, arranging paperwork, or planning tax-efficient repatriation? Get in touch for a personalized NRI consultation.